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CW Asset Finance | Vehicle & Equipment Finance Yorkshire

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Does a merchant cash advance require security or collateral?

A merchant cash advance is usually advanced against your future card takings rather than secured on a specific asset, so a charge over property or equipment is not typically taken. However, most providers will ask directors for a personal guarantee, which is a serious commitment in its own right.

Under a personal guarantee you are personally liable if the business cannot repay. The provider can pursue you for the outstanding balance from your own assets and income. That liability can outlast the business itself, so treat a guarantee as a decision to take advice on, not a formality.

The repayment mechanism is a percentage of card sales, so the amount collected flexes with trading. That helps in a quiet month, but it also means a slow period extends the repayment period and the cost is a fixed fee rather than something that shrinks if you repay quickly.

Merchant cash advances suit businesses with steady card income and a short-term need. They are not a low-cost option, and settling early does not usually reduce the total payable. Compare the total cost against other facilities before committing.

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CW Asset Finance is a credit broker, not a lender. Finance is subject to status and lender approval.